Cuomo warns of $4 billion deficit—but his own agency says it is much smaller

Cuomo made the reports a requirement of the Start-Up NY program when it began three years ago.

Gov. Andrew Cuomo claimed Monday that New York State faces a $4 billion budget deficit next fiscal year—but his own office's projections put it at one-fifth as much, thanks to his 2% spending increase cap.

The governor casually told a gathering of business leaders on Lake George that Albany will have to fill a sizable shortfall in crafting the fiscal 2019 budget this coming spring. He noted that election-year pressure would make the task more difficult.

"We're looking at a $4 billion deficit going into next year. That is a big hole to fill. We need 4 billion to get to zero. And that without a penny more being spent," the Democrat said at the annual meeting of the Business Council of New York State. "And again, it's an election year. Everyone is going to want to go back a hero. More education money, more economic development money, et cetera."

The comment came from a governor who has flung billions in public money at an array of economic incentives and initiatives that have thus far produced more optimism than results.

Further, Cuomo's own Division of Budget promoted a far rosier vision of the upcoming fiscal year in the quarterly update it released in August. It projected more than $3 billion in savings thanks to the governor's self-imposed 2% spending cap, trimming the budget deficit to $841 million, which is just 1% percent of general-fund expenditures and 0.5% of total spending.

"The governor is expected to propose, and negotiate with the Legislature to enact, budgets in each fiscal year that hold state operating funds spending growth to 2%," a footnote in the document reads. "[This projection] assumes all savings from holding spending growth to 2% are made available to the general fund."

Further, $4 billion represents only a little more than 2.6% of $153.1 billion state budget Cuomo approved in April. That fiscal plan was replete with new spending programs like the Excelsior Scholarship, which provides free tuition to full-time public college students from households earning less than $125,000 per annum—in addition to a new affordable-housing property tax rebate and measures to combat homelessness and the opioid epidemic.

Budget hawks slammed the the governor for using several sleights of hand to avoid cracking the 2% spending cap, such as writing off the rebate program as a decrease in revenue rather than an increase in spending, punting payments to the New York Power Authority to future years and shifting employee-related operating expenses onto the capital plan.

Cuomo also cited the possibility of federal funding cuts in the billions of dollars in his argument for discipline for fiscal 2019, which begins April 1.

Crain’s New York Business is the trusted voice of the New York business community—connecting businesses across the five boroughs by providing analysis and opinion on how to navigate New York’s complex business and political landscape.